Nestlé confirms Novartis Medical Nutrition buy

Swiss food giant Nestle has confirmed its plan to purchase Novartis
Medical Nutrition for US$2.5bn - a move that propels it from a
minor player in healthcare nutrition to the world number two.

Rumours that Nestle has been discussing the acquisition of the
unit, which makes nutritional supplements - both oral and tube
delivery - for use in hospitals and nursing homes, have been
circulating since November.

In addition to bolstering Nestle's health and nutrition division
- a major area of focus and investment - the deal comes with 2000
employees, whose expertise will boost Nestle's R&D
capability.

Peter Brabeck-Letmathe, Chairman and CEO of Nestlé, said: "I
am very pleased that this acquisition allows us to become a very
strong player in the strategic core category of nutrition. … This
is a very important step for the Nestlé Group in its strategic
transformation process to a nutrition, health and wellness company
as it strengthens the core of our globally managed Nestlé Nutrition
business."​

Nestle has said that the unit is complementary to its existing
healthcare nutrition activities, both in geographical spread and
products. "The combination of both offers a product portfolio
covering all disease specific cases where special nutrition is
needed,"​ it said. Because of the synergies it does not expect
there to be any short term material impact on the earnings.

Nestlé Nutrition is an autonomous unit within the group, and it
already has a global presence in infant nutrition, health care
nutrition and performance nutrition. For the first nine months of
the current fiscal year the nutrition unit reported sales of
CHF4.3m (€2.7m), up from CHF 3.8m (€2.4m) for the prior year
period.

The transaction, which is subject to regulatory approval, is
expected to complete in the second half of 2007.

In its communication about the acquisition Nestle made no
mention of speculation that it is also looking to buy Novartis'
Gerber baby foods division.